Government snubs Seoul on submarines and artillery

A row over South Korea’s inability to break in to the Australian defence market threatens to cruel talks over the development of advanced submarines.

An Australian defence analyst said South Korea – Australia’s fourth biggest trading partner – was “underplayed’’ in the government’s Asian Century white paper.

“At the very least the messages in the white paper about Australia wanting to develop a close relationship with Korea are ambiguous,’’ said University of NSW-based analyst Alan Dupont.

South Korean technology giant Samsung Techwin criticised the Defence Department and Australia after the government cancelled in the May budget a $225 million contract to buy heavy artillery. Samsung and partner Raytheon were the preferred tenderer for two years and spent millions bringing 40-tonne guns to Australia for trials.

Korean industry sources said the decision had not been accepted lightly in Seoul, given the close links between industry and government.

Senior Department of Foreign Affairs and Trade officials conceded Seoul was disappointed, but said the relationship was robust.

South Korea, one of Asia’s leading shipbuilders and a fellow ally of the United States, is an exporter of submarines and wants to treble its defence exports by 2020.

The Gillard government is investigating options for building 12 submarines as part of a project to replace the ailing Collins class, worth up to $35 billion. Defence has confirmed talks have taken place between Australia and Korea, as well as with Korean submarine builders Hyundai Heavy Industries and Daewoo Shipbuilding and Marine.

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Defence Minister
Stephen Smith
and South Korean Defence Minister Kim Kwan-jin discussed their submarine programs at a defence ministers’ meeting in December 2011, but the two have not held further talks on submarines.

South Korea manufactures under licence from Germany one of the submarines Australia is considering as a replacement for the troubled Collins – the HDW Type 214. Seoul is planning to build an indigenous submarine fleet by 2022.

South Korean industry sources suggest Seoul is interested in whether any export contracts may be available on the Australian submarine project, but has been informed the Gillard government is committed to building them in Adelaide, even though production costs in Korea could be up to 30 per cent cheaper.

South Korea’s submarines are expected to closely ally with the parameters Canberra laid down in the 2009 Defence white paper for submarines of up to 4000 tonnes, with air-independent propulsion and land-attack cruise missiles.

South Korea’s country profile, which was part of the Asian Century white paper released last week, acknowledges how Australia values it as an arms supplier.

“South Korea is likely to continue to develop as a significant regional supplier of military equipment and will look to Australia’s high technology armed forces as potential buyers,’’ it says.

Nationals deputy leader
Fiona Nash
has asked Foreign Minister
Bob Carr
if he could guarantee the “shoddy treatment’’ of a major ally would mean no “diplomatic trade or commercial fallout’’. Senator Carr told Parliament he spoke to South Korean Foreign Minister Kim Sung-hwan a week ago and the issue of the artillery tender wasn’t raised.

Australian Strategic Policy Institute capability analyst Andrew Davies said co-operating with South Korea on high-end submarines could be problematic as it is not a “first-tier ally" of the US like Australia or Japan and that might pose difficulties in getting the type of systems for Australia’s submarines.